An interesting story today, in the Las Vegas Sun, concerning Corus Bank's foreclosure on the unsold condominiums in the Streamline Tower, at the seedy edge of downtown Las Vegas. Corus did not foreclose on the whole building, just on the unsold condo units, which represented about 85% of the building's 275 condo units.

The Sun reports that one local real estate investor says the foreclosed units appraise at about $30 to $35 Million, total. The Sun reports that representatives from one of Las Vegas' most affluent, not economically troubled investment groups say that they are interested in buying out Corus Bank's inventory, but that the bank has a very unrealistic view of those condo units value.

Apparently, on 5/19/09, Corus Bank presented the U.S. Bankruptcy Court with an appraisal saying that the to-be-foreclosed units were valued at $97 Million.

A claimed value of $97 Million to the bankruptcy court, with savvy local investors telling Corus Bank their REO is worth $30 - $35 Million at the most.

I wonder what Corus Bank's officers are telling the bank's auditors and the FDIC, concerning the value of that REO holding, even before discounting the valuation for the cost of paying HOA assessments and real estate taxes on the unsold units for years to come?

If Corus Bank is getting away with bs'ing the FDIC, to the tune of $67 Million in value, my fears for the solvency of the FDIC are greatly increased.

As a reinforcement of the numbers in the Las Vegas Sun's story, shown at the link above, about Corus Bank's wild "spread" of $60 to $65 Million in over valuation of a broken high rise condo project it just foreclosed, see today's article from the Las Vegas Review Journal, which gives a great deal of detail about the very low price per square foot new luxury highrise condos are bringing:

Once again, I am very afraid that FDIC is being bamboozled by banks' appraisals of their REO. It used to be that the "aggressive appraisers" worked independently in connection with the making loans. It looks like now they are working inside banks, ginning up crazy, unobtainable values for REO, not taking into account discounts for long term holding costs, as FDIC has always required.

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